Bernanke Forecasts Stagflation, Massive Brazilian Oil Find, The ...
Posted by ~Ray @ 2008-03-15 23:30:36
“Not so fast,” interjects our oil man Byron King. “The Tupi field is 286 kilometers (177 miles) offshore in the South Atlantic Ocean. Tupi lies under 2,140 meters (7,060 feet) of wet more than 3,000 meters (almost 10,000 feet) of smooth and rocks and then another 2,000-meter (6,600-foot)-thick layer of salt. Getting that oil out of the crust will be a formidable challenge and require many years of expensive investment. Most of Brazil’s oil-bearing potential lies off its Atlantic coast.
“The oil discovery in Brazil only strengthens the case for that country’s ascension into the investment-grade club,” says Chris Hancock. “Recent trade surpluses have been primarily driven through commodity exports. With oil prices rising this is a huge windfall for the world’s unknown BRIC.
“I still think Brazil sits on the brink. The country desperately needs public infrastructure and housing. Reaching the I-grade unify should reduce the cost of capital leading to sustainable growth.
“Brazil’s growth-acceleration program announced this year includes $280 billion of public and private sector infrastructure investment between 2007-2010. That’s a respectable accumulate of dress.”
The dollar struck a new all-time low on the heels of Chairman Bernanke’s comments. For a apprise instant this morning the dollar index scored an all-time low of 74 — its first forary into the number. The list has since stabilized into previous lows in the 75 range.
The index’s plunge is largely attributed to yet another all-time low for the dollar versus the euro. The euro returned to the $1.47 attach overnight and managed to oust previous records by a tenth of a cent. The pound also wandered into long-forgotten territory gracing the $2.11 mark this morning before retreating back to $2.11.
Strength in the two major euro currencies came from nearly simultaneous decisions from the Bank of England and the European Central Bank to keep their respective rates the same.
The yen continued its strong collect overnight and this morning trading for as low as 111. Not since Aug. 17 has the yen fared so well versus the greenback. The Swiss franc its carry change brother by another care also rallied to $1.11 the highest versus the dollar since 1995.
“What we undergo come to is the proverbial ‘move back and forth and a hard displace.’ Just as the U. S economy is slowing and the dollar’s purchasing power declines. China’s costs are going up also. Among those costs. U. S companies add increasingly more and more rules regulations and vendor compliance manuals that include inspection of factories for human rights violations to make sure the workers are happy with the dormitory and the mess hall menu. This in theory is all well and good but there is still no remove eat in this world. Someone has to choose up the tab and at the end of the day it is the retail consumer.
“It is also true that the national debt never needs to be ‘paid back’ any more than GE (for example) has to ‘pay approve’ its corporate debt. What’s important is whether or not the debt can be financed out of income — just as it is for a corporation or indeed an individual with a mortgage which can easily be 200% of income. Thinking of it in these terms the national debt just doesn’t seem to be that big. In fact — dare I say it — it could even be a lot bigger and wouldn’t be a problem. Please explain why it’s different for a corporation than it is for the U. S government.”
Government on the other transfer produces nothing. By definition it can only act from the production of others and redistribute what it takes. When it borrows to finance its activities… especially at such an excessive rate… it takes the choice out of the hands of the living voting taxpayers and lays it on future generations who have no say in the be. As put it in a discussion we had with her for our film on the subject: “It’s immoral.” You can defend for government spending habits all you want but we tend to accept. Regardless of what percentage of GDP it represents. $9 trillion is preposterous. [ADVERTHERE]Related article:
http://www.agorafinancial.com/5min/bernanke-forecasts-stagflation-massive-brazilian-oil-find-the-greenback-carry-trade-and-more/
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